Investors’ risk appetite has been renewed as coronavirus recovery continues and is on the rise as the financial market, altered by the pandemic, offers new opportunities.
A combination of the successful roll-out of vaccine programmes in several countries, abundant liquidity, fiscal stimulus initiatives being offered by regional and international governments and low inflation are contributing to renewed investors’ confidence these days, said Daniel Savary, head of wealth management for Pictet in the Middle East and Africa.
“While some high-net-worth individuals are looking to consolidate and preserve their assets, given the crisis, others see the disruptions as attractive buying opportunities in certain pockets of the capital markets and others,” said Savary.
“Some other factors pushing investors to an enhanced risk appetite are the avoidance of a hard Brexit, the end of a tortuous election cycle in the US and I believe also China’s recovery,” he continued.
As a result, a shift from long-term growth into cyclical growth and active management across all asset classes has significantly picked up nowadays versus pre-Covid times, meaning that the pandemic has raised opportunities for investors, said Savary.
“During Covid, I believe people had a lot more time to more carefully assess opportunities in addition to the opportunities created by coronavirus that were not there before,” he continued.
Healthcare is one of the sectors that warranted investors’ attention during the pandemic last year and is continuing to do so now, said Savary, in addition to the tech sector.
Swiss multinational private bank and financial services company Pictet is also observing increased investments in emerging markets this year as the global recovery gathers pace, explained Savary.
“Alongside China and North Asia, cyclical economies in Latin America and Eastern Europe, the Middle East and Africa may also outperform for a while,” said Savary.
Daniel Savary, head of wealth management for Pictet in the Middle East and Africa
“Commodities also widely enjoy a positive outlook. The value of private equity deals has soared as managers have snapped up target firms, made more accessible by coronavirus. Cheap debt combined with ongoing operational and balance-sheet restructuring should continue to feed investors’ interests,” he continued.
Mergers and acquisitions will be a major theme in the months ahead as companies lock in low interest rates to fund acquisitions, said Savary.
The industrial sector, especially environmentally friendly investments in infrastructure for example, ties in to the “green recovery” global initiative being supported by various governments and is therefore becoming more attractive to investors, he explained.
Although still considered a nascent wealth management hub, when compared to Switzerland or New York, Dubai is “continuing its incredibly fast development as a reputable international wealth management hub with a great vision and close proximity to the wider Middle Eastern region,” said Savary.
“The excellent worldwide ranking has been spurred mostly by the exceptional development of the DIFC since its inception in 2004, the leading financial hub in the Middle East, Africa and South Asia and home to the largest and most developed financial ecosystem in the region,” he explained.
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